Amid the awful market conditions confronting building and construction contractors in Australia, the latest reports that a number of small construction firms – including at least one which was placed in administration earlier this month – are awaiting payment from a company owned by rich list entrant Nathan Tinkler are likely to cause outrage amongst contractors around the country.
In the latest developments, as reported by SmartCompany, Construction firm Fraser Commercial, which was placed in voluntary administration earlier this month, was reportedly owed $33,000 from Bolkm – the construction arm of Hunter region focused property group Buildev, which is part of the Tinkler Group.
Tinkler, who is said to lead an extravagant lifestyle and who owns the Newcastle Knights rugby league club as well as the Newcastle Jets soccer club, was featured in the 2012 BRW Rich 200 with an estimated net wealth of $915 million.
The latest reports follow earlier reports in Fairfax Media that Tinkler’s racing company, Patinack Farm, failed to meet superannuation payments for workers, and add to speculation that Tinkler is experiencing personal financial turmoil.
According to the SmartCompany report, as many as seven businesses are trying to recoup payments from both Patinack Farm and Bolkm.
In addition to Fraser Commercial, who’s managing director Mitch Fraser has previously told Fairfax that he had to sell personnel assets to pay debts because his firm was owed money by Tinkler’s firm, contractor Rob Atherton claims to be owned $50,000 for roofing work.
Anger for Small Contractors
The latest reports come amid increasing levels of frustration for small and medium sized contractors who continue to be led along by large creditors.
Following the collapse of Reed Constructions, which went bankrupt with unsecured creditors unlikely to see any of the $89 million they are collectively owed, the state government of New South Wales (the state in which Tinkler’s Buildev primarily operates) has announced an inquiry into the construction industry.
Nationally, there are calls for an overhaul of security of payments laws, which are designed to reduce risk and assist in cash flow of building contractors by entitling them to receive payments progressively throughout the life cycle of projects rather than waiting for one big lump sum payment at the end (and praying that payment actually comes through).
Still, there are no magical solutions, and the practice of large companies continually dragging along small to medium sized suppliers and contractors to whom they owe money – a practice euphemistically known as ‘stretching your accounts receivable’ – is likely to continue to cause cash flow headaches for building contractors in Australia throughout the foreseeable future.